Some other troubleshooting measures you could try
To be clear, the following measures did not resolve the excessive-CPU-usage-fseventsd problem. Nonetheless, these were the initial tests, and are probably good things to try for a wide variety of issues.
Reset the System Management Controller (SMC)
Everyone knows the ol' off-and-back-on trick, which should always be the first go-to. Resetting the SMC is one notch above that. To do this, you need to turn off your iMac and then unplug its power supply (keyboards, trackpads, etc. don't matter) for at least 15 seconds before turning it back on. Then plug it back up and power back up. Don't worry-- resetting the SMC won't alter any of your settings.
Reset the Non-Volatile RAM (NV-RAM)
We also tested the possibility that there could be some parcel of information hanging around in the NV-RAM possibly causing fseventsd to [malfunction]. To clear/reset the NV-RAM, first turn off your computer. Then, as soon as you press the power button to turn it on, immediately press and hold OPTION, COMMAND, P, and R. Keep holding those keys down. If it works, you'll see the Apple logo appear on a black screen, then disappear, then (after about 20-30 seconds) reappear, then disappear again. At this point, you can let go of the keys. Then your computer should resume the familiar boot process.
Check if problem is system-wide, or user-specific
If there is legitimately something wrong with the OS, reinstalling the OS might be required. If the problem is in the OS, then any/all users in your computer would experience the same issue. Therefore, if another user profile does not experience the same issue, then the issue is not system-wide, and is likely related to a specific app/feature/software being used specifically by the user that encounters the problem. Thus, I simply tested this by signing in under a guest profile, and checking the fseventsd usage in that user's Activity Monitor.
Check if it is related to a Time Machine backup
One widely discussed use of fseventsd is in creating Time Machine backups. Here is a command you can use in Terminal to get some information about the last few backups created:
tmutil thinlocalsnapshots / 999999999999999 4
Test for possible fault of 3rd party program (boot in "safe mode")
If you determined above that the problem is user-specific, then a natural next question is whether the problem is related to some 3rd party app installed by that user alone. One way to potentially (not exhaustively) figure this out is to boot in "safe mode." Safe mode will disable most 3rd party apps (though I don't think all... could be wrong), so if the problem disappears in safe mode, the solution could be as simple as uninstalling or reinstalling the problematic app (good luck identifying it though). To boot in safe mode, shut down your computer and wait 10 seconds. Immediately after turning your computer back on, press and hold SHIFT. Release the Shift key when you see the login window.
Safe mode will feel like your computer has a serious virus-- everything will be incredibly slow-- on purpose. Just check the fseventsd usage in your Activity Monitor and get the heck out of there. Simply turning your computer off and on again will un-set safe mode.
Become "root" to take a closer look (at anything)
Even if you are the only person that has ever owned or used your Apple computer, by default you're not the "owner" of all files/directories/processes. That person is called the "root" user, and that person is not you by default. This is a safety measure that Apple implemented to protect their average user from himself. (Basically, Apple has ensured that even cd /; rm -f * won't totally destroy your computer when you're signed regularly.)
Thankfully, you can become the root user, but Apple makes you really want to. Apple has its own instructions for enabling the root user privileges here.
Once you enable the root user and sign in as root, you'll be able to actually navigate to and look inside any/all data on your computer. For example, you could try this, which you are unable to do unless you are root:
cd /.fseventsd/
ls